Corporate Tax Incidence: Review of General Equilibrium Estimates and Analysis
66 National Tax Journal 185-214 (March 2013)
This paper identifies the major drivers of corporate tax incidence in open-economy general equilibrium models and compares estimates from four major studies. These studies vary in their elasticity assumptions, and adjusting the estimates to reflect central empirical estimates of those elasticities suggests capital bears the majority of the corporate income tax burden. This paper further presents an alternative method for determining corporate tax incidence that distinguishes between global effects of corporate taxes and excise effects that vary among nations. Under this approach, even in an open economy, capital could bear virtually the entire tax burden.